Case Shows Importance of Using Caveats

Caveats included in pension benefit statements provided by Ford Motor Company saved the company from liability in a recent court case.

U.S. District Judge James S. Gwin of the U.S. District Court for the Northern District of Ohio found the evidence shows Thomas Spiewacki’s reliance on an early retirement benefits representation sent to him was unreasonable. He noted that the retirement packet Spiewacki received in response to his retirement query three times said the benefits quoted in the packet were only estimates.

According to the court opinion, the packet cover letter also said the final benefits would depend on factors such as “the Company record [and] pension plan formulas” and that the benefits would be “recalculated to reflect your final employment data” after Spiewacki retired. The document with the benefit calculation also said that the “calculations are subject to corrections for errors in your record or otherwise.” Gwin wrote: “In light of these disclaimers, plaintiff could not reasonably rely on the estimates being correct.”

Gwin said Spiewacki must either show Ford’s actions contain an element of fraud or they were grossly negligent, but he provided no evidence about why the Ford defendants miscalculated his benefits in the initial letter. Gwin also rejected Spiewacki’s claim that the Ford defendants induced his retirement by providing him with incorrect benefit estimates. The evidence did not show Spiewacki believed Ford wanted him to retire, and no evidence exists in the record to show whether the plan and defendants would have been better off had Spiewacki retired instead of continuing to work, Gwin said.

The court also found Spiewacki’s reliance on another case, Bloemker v. Laborers’ Local 265 Pension Fund, is incorrect (see “6th Circuit Permits Pension Estoppel Cases”). Gwin noted that in Bloemker, the defendants sent the plaintiff an estimate of the plaintiff’s retirement benefits that included similar disclaimers, but when the Bloemker plaintiff retired, defendants paid him the estimated amount for almost two years before realizing they had misinterpreted the plan in calculating his benefits. In that case, the plaintiff was asked to repay the defendants more than $11,000 for the two years of overpayments. In the current case, the defendants never paid Spiewacki the estimated amount. “Rather, the Ford Defendants did what the disclaimers had promised: they recalculated his benefits in accordance with his company records, discovered an error, and corrected it,” Gwin wrote.

Gwin noted in his opinion that disclaimers do not attempt to disclaim liability for breach of fiduciary duty; rather, they tell the recipient that the estimated calculation is not final. “The fact that a fiduciary may not disclaim its fiduciary obligations does not mean that a person may rely on a clearly-marked estimate,” he said. He granted summary judgment for Ford.

According to the court opinion, in 2011, the plant at which Spiewacki worked was closed, and under his collective bargaining contract, he could either retire or work at a different Ford facility. He requested information about Ford’s special early retirement package, and the Ford National Employee Services Center sent him a packet of information concerning the benefits for which he was eligible. The packet stated that the benefit for a “Single Life Benefit” would be $2,769.34 per month until April 1, 2018. After April 1, 2018, the benefit would be $1,422.66 per month. These calculations were made by a third-party administrator, Xerox HR Solutions.

One document entitled, “Retirement Benefit Statement,” contained a “DISCLAIMER,” that read:

Calculations detailed on this statement estimate the pension benefit you may receive upon retirement based on current Plan provisions and the assumptions shown. These calculations are subject to corrections for errors in your record or otherwise. If this estimate differs from your actual benefit, the applicable Plan document will control the final determination concerning your benefit under the Plan. Any information shown as assumptions may vary based on the date you are eligible to retire or the options you have requested.

Spiewacki retired in November 2011 and selected the “Single Life Benefit” option. He did not receive a Payment Adjustment Letter as promised by the packet. In May 2012, the plan's Board of Administration realized Xerox mistakenly had calculated his benefit as if he had 26.2 years of credited service with Ford instead of 22.8 years. Using the correct amount of credited service, Spiewacki’s benefit under the plan should have been $2,420.53 per month until April 1, 2018, and $1,243.47 per month afterwards. The Board told Xerox to only pay the revised amount. Because Xerox began paying Spiewacki benefits in June 2012, retroactive to his retirement, he has only received the revised amount.

The opinion in Spiewacki v. Ford Motor Company is here.